If you haven’t filed your taxes yet, you may want to consider getting that done sooner rather than later; the deadlines is April 15th. If you’re a homeowner, there are some things you should know about mortgages and taxes. For example, most of the time, the interest paid on your mortgage is tax deductible. Further, in most cases, if your home appreciates from the time that you purchased it, you’re not responsible for paying taxes at the federal level.
With the purchase or refinance of a home, there are fees included. Traditionally, these fees have been tax deductible. However, there have been some changes to qualifying loans. For example, HELOCs, Home Equity Line of Credit, are loans that can be used for making changes and improvements to the home, but they can also be used for personal reasons too. For example, you can take out the equity on your home and use it to pay off credit card debt or pay for medical expenses. In the past, the interest paid on these loans were deductible, regardless of what it was used for. Now, it can only be used when the equity was used to make changes/improvements on the home.
Due to the Tax Cuts and Jobs Act of 2017, there have been many changes to what you will and will not be able to deduct and take credit for. Further, even though mortgage interest is still tax deductible, there have been changes to how that works, as well. Some people are getting way less back than they are accustomed to, while others are owing when they haven’t in the past. We encourage you to speak with an accountant to ensure you file your taxes correctly and not get penalized in the future.